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NAV per share for H1-23 rose by 12.4%, dividends reinvested. This trend was driven by listed holdings, despite the downward revision of property assets. The year 2023 ended with a rally in the equity markets against a backdrop of falling interest rates. We are taking advantage of this movement to highlight the operating performance and prospects of 3 listed holdings that stood out. Despite the economic slowdown observed since 2023, China (and Asia) represent growth drivers for each of these 3 groups. It should be noted, however, that any downturn in Chinese growth will have a negative impact on the perception of Forvia and SEB, which have a strong presence on this continent (29% of their sales).

  • Stellantis (7.1% holding and 42.9% of GAV H1-23)
  • Forvia (3.1% holding and 1.6% GAV H1-23)
  • SEB (4.0% holding and 3.0% of GAV H1-23)

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In H1-23, NAV per share stood at €221.3, compared with €199.5 at end-2022, up 12.4% with dividends reinvested. Listed investments outperformed the markets, thanks in particular to Stellantis (+31% ytd), the valuation of co-investments was boosted by the sale of Polyplus (gene therapy, multiple of 3.8x, IRR: 62%) to Sartorius, and that of investment funds was stable. This performance was achieved despite the downward revision of property assets (11% of the GAV at the end of 2022).

Net debt came to €862m, including €152m for the investment in Rothschild & Co in H2. LTV stood at 14%, down on H1, which bodes well for the future. It should be remembered that all debt is at a fixed rate.

The Group’s discount remains high at 54%, illustrating investors’ mistrust of investment companies with low liquidity. Management is aware of this situation and may consider buying back shares to try to reduce it. Compared with other comparable companies, PEUG’s stock market performance was satisfactory in H1-2023 (+13%).

With an unchanged discount, our central scenario shows a potential upside of 31%. Upload the report

At the end of 2022, the NAV reached €5.9bn or €199.5 per share (- 14%). Dividends received amounted to €286m, driven by Stellantis (€170m). Net debt was €885m, €261m lower than at the end of 2021, giving an LTV of 16%. This was achieved despite €329m of investments, including €200m of commitments to private equity funds, as expected. Asset disposals amounted to €532m (investments and co-investments).

The strategy, visible since 2017, to accelerate in the non-listed sector is reflected in a resilient GAV Investments (-10% in 2022 despite the collapse of Orpéa). It is divided between listed and unlisted holdings for 29%, co-investments for 19% and funds for 14%.

In February 2023, PEUG sold its 6.3% stake in the holding company of Tikehau Capital for €100m(E). PEUG is also participating in the recomposition of Rothschild & Cie’s shareholding via the takeover bid launched by its holding company Concordia (€150m(E)). Lastly, the group benefited from the public tender offer announced by Lisi, followed by a capital reduction by the holding company CID. This should enable it to significantly increase the liquidity of its exposure.

PEUG’s valuation does not take into account the evolution of its portfolio and its resistance. The discount to NAV is 55%, the highest in our sample of peers.

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PEUG will publish its half-yearly NAV on March 22.

After a 17.2% decline in H1, the NAV at 31/12 should benefit from the 7.2% increase in listed assets in H2 (53% of the GAV).

PEUG has not communicated on new investments but had indicated in September that it was selling assets at satisfactory multiples. The unlisted portion of NAV should therefore not disappoint.

Orpéa has become insignificant in terms of weight, but remains an important issue in terms of refinancing. This should be resolved in the coming months.

In H2 22, PEUG’s share price rose by only 3% (-28% over the year), showing a discount of 56% to the spot NAV of €200,4.

 

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10 bets on renewable

La prise de conscience de l’enjeu du réchauffement climatique, les objectifs politiques et l’explosion des prix des énergies fossiles nourrissent un fort intérêt pour les énergies renouvelables (ENR). Rien qu’en France, la Programmation Pluriannuelle de l’Énergie, adoptée en 2020, prévoit de doubler la capacité de production d’électricité renouvelable d’ici 2028 pour atteindre la neutralité carbone à 2050. Production d’électricité et de chaleur décarbonée, captation et transformation des émanations de méthane, massification de la production d’hydrogène vert sont autant de pistes à suivre pour atteindre cette ambition.

A côté des grands énergéticiens tels Engie ou EDF, des producteurs de gaz tel Air Liquide et des majors pétroliers qui investissent massivement dans le renouvelable, existent en France une dizaine de producteurs d’ENR cotés de plus petite taille. Ils complètent l’action des plus grands, souvent en symbiose avec eux, en apportant innovation, agilité et proximité. Nous avons retenu : Agripower, Charwood Energy, Groupe OKwind, Haffner Energy, Hydrogène de France, La Française de l’Energie, Lhyfe, Neoen, Voltalia et Waga Energy.

Nous avons choisi de décrire leur positionnement et leur stratégie afin d’aider les investisseurs à discerner, au-delà d’une tendance porteuse, les facteurs clés de succès propres à chacun d’eux. Si le potentiel de croissance est bien présent dans tous les segments, les profils de risque varient fortement. Les valorisations traduisent le potentiel de croissance et de rentabilité et sont, en général, élevées.

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At the end of the first half of 2022, NAV stood at €4.78bn and NAV per share at €192, compared with €235 at the end of 2021, a decline of 17.2%, dividend reinvested. Over the period, the portfolio’s diversification into unlisted investments and the high dividend payments made by Stellantis offset part of the decline in the share price of listed holdings (-31.4%).

Stellantis, 34.9% of the group’s GAV, published dynamic half-yearly results despite a hostile economic climate. Orpéa, with 1.3% of the group’s GAV at 30 June, continued its descent into the stock market. A new management team is implementing a recovery strategy, but the model is being called into question.

The group’s discount reached a historically high level of 55% (+8pts) compared to 31/12/21. The share price remains correlated to Stellantis, while the evolution of NAV demonstrates the resilience of an investment mix that is less and less exposed to market volatility. However, the increase in the discount is less marked than that of its peer group (+25 points), which is impacted by investors’ distrust of more aggressive investment models.

With an unchanged discount, our central scenario shows an upside potential of 29%, which would rise to 71% with a reduction of the discount to 40%.

Update ANR – Sept 22 VA

PEUG will publish its half-yearly NAV on 13 September.

Despite the increase in the relative weight of unlisted investments in the NAV (from 15% in 2007 to 36% at the end of 2021), the NAV at 30/06 will be impacted by the fall in the financial markets. Taking into account only the listed investments, the NAV would have fallen by 23% at 30/06/22 to €180 per share, although less than the share price (-30%). The discount has widened to 52%.

Decisions recently taken by Orpéa, of which PEUG is the 2nd shareholder, during the first half of the year seem to us to be in line with the stakes.

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2021, a record year

PI’s NAV increased by 32.2% in 2021. All types of investments contributed, with Stellantis taking the lead. Investments reached the high level of €726 million, exclusively in unlisted assets which represent 62% of the Investment GAV. Divestments and dividends received covered most of the financing needs.

Stellantis published very good results confirming the success of the merger. Carlos Tavares presented his 9-year plan to transform the group into a “sustainable mobility tech company”, structured for “all times” with a break-even point low enough to face all situations. He aims to double revenues to €300 billion with a double-digit margin.

Our central valuation scenario takes into account 1/ the strong increase in uncertainties arising from the Russian invasion of Ukraine, which leads us to apply a 50% discount to the consensus price targets for listed companies. 2/ In the specific case of Orpéa, we are retaining the current share price. Beyond the reputational crisis, the profitability of the business model will, in our opinion, remain questionable for a long time. Excluding these elements, our central scenario is based on an annual IRR of 15% for unlisted assets. This results in a potential NAV of €263 per share, i.e. an upside of 26%. The application of a 30% discount instead of the current 45% would generate a substantial upside on the share price.

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Focus on private equity

PI implemented a portfolio construction strategy with a regular annual commitment approach starting in 2014 and then formed a dedicated team. These developments have accelerated since 2017. The group has sown a lot and the value of private equity fund shares has quadrupled since then.

The PI strategy is structured around a limited number of partners with whom the group seeks to build ongoing relationships. The group invests mainly in Europe and the United States in Growth and LBO funds, mainly in the Tech and Healthcare sectors.

PI does not yet report on the performance of its investments. We modeled recent investment flows and expected distributions starting in 2021 over an 8-year period. Based on the average multiples paid and exit levels achieved in private equity over the last few years, we calculated the expected investment flows and distributions. We conclude that the group will benefit in the coming years from repayments in excess of its capital calls, unlike the last 5 years.

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